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GuruFocus has detected 2 Warning Signs with Valero Energy Corp $VLO.
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Valero Energy Corp (NYSE:VLO)
Beneish M-Score
-2.51 (As of Today)

The zones of discrimination for M-Score is as such:

An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.

Valero Energy Corp has a M-score of -2.51 suggests that the company is not a manipulator.

VLO' s Beneish M-Score Range Over the Past 10 Years
Min: -90.16   Max: 2.19
Current: -2.51

-90.16
2.19

During the past 13 years, the highest Beneish M-Score of Valero Energy Corp was 2.19. The lowest was -90.16. And the median was -2.36.


Definition

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.

The M-Score Variables:

The M-score of Valero Energy Corp for today is based on a combination of the following eight different indices:

M=-4.84+0.92 * DSRI+0.528 * GMI+0.404 * AQI+0.892 * SGI+0.115 * DEPI
=-4.84+0.92 * 1.0941+0.528 * 1.3763+0.404 * 1.1405+0.892 * 0.9943+0.115 * 0.9972
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0477+4.679 * -0.068-0.327 * 1.1183
=-2.51

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $5,104 Mil.
Revenue was 21772 + 20712 + 19649 + 19584 = $81,717 Mil.
Gross Profit was 1227 + 1296 + 1554 + 1917 = $5,994 Mil.
Total Current Assets was $15,908 Mil.
Total Assets was $46,047 Mil.
Property, Plant and Equipment(Net PPE) was $26,991 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,909 Mil.
Selling, General & Admin. Expense(SGA) was $749 Mil.
Total Current Liabilities was $7,899 Mil.
Long-Term Debt was $8,369 Mil.
Net Income was 305 + 367 + 613 + 814 = $2,099 Mil.
Non Operating Income was 17 + 21 + 12 + 14 = $64 Mil.
Cash Flow from Operations was 988 + 998 + 863 + 2319 = $5,168 Mil.
Accounts Receivable was $4,692 Mil.
Revenue was 15714 + 18777 + 22579 + 25118 = $82,188 Mil.
Gross Profit was 1470 + 1346 + 2800 + 2681 = $8,297 Mil.
Total Current Assets was $14,861 Mil.
Total Assets was $44,259 Mil.
Property, Plant and Equipment(Net PPE) was $26,745 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,886 Mil.
Selling, General & Admin. Expense(SGA) was $719 Mil.
Total Current Liabilities was $6,775 Mil.
Long-Term Debt was $7,207 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(5104 / 81717) / (4692 / 82188)
=0.06245946 / 0.05708863
=1.0941

2. GMI = Gross Margin Index

Measured as the ratio of gross margin in year t-1 to gross margin in year t.

Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(8297 / 82188) / (5994 / 81717)
=0.10095148 / 0.07335071
=1.3763

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (15908 + 26991) / 46047) / (1 - (14861 + 26745) / 44259)
=0.06836493 / 0.05994261
=1.1405

4. SGI = Sales Growth Index

Ratio of sales in year t to sales in year t-1.

Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=81717 / 82188
=0.9943

5. DEPI = Depreciation Index

Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.

DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.

DEPI=(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1)) / (Depreciation_t / (Depreciaton_t + PPE_t))
=(1886 / (1886 + 26745)) / (1909 / (1909 + 26991))
=0.06587266 / 0.06605536
=0.9972

6. SGAI = Sales, General and Administrative expenses Index

The ratio of SGA expenses in year t relative to year t-1.

SGA expenses index > 1 means that the company is becoming less efficient in generate sales.

SGAI=(SGA_t / Sales_t) / (SGA_t-1 /Sales_t-1)
=(749 / 81717) / (719 / 82188)
=0.00916578 / 0.00874824
=1.0477

7. LVGI = Leverage Index

The ratio of total debt to total assets in year t relative to yeat t-1.

An LVGI > 1 indicates an increase$sgai= in leverage

LVGI=((LTD_t + CurrentLiabilities_t) / TotalAssets_t) / ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
=((8369 + 7899) / 46047) / ((7207 + 6775) / 44259)
=0.3532912 / 0.31591315
=1.1183

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(2099 - 64 - 5168) / 46047
=-0.068

An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.

Valero Energy Corp has a M-score of -2.51 suggests that the company will not be a manipulator.


Related Terms

Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Valero Energy Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.6340.31722.28610.95271.18460.88221.06140.67651.10841.6125
GMI 1.15411.58011.85230.7471.01010.74761.31720.73360.62631.231
AQI 0.95740.70750.82810.44681.0021.01081.24751.00341.22881.0582
SGI 1.07361.18680.5711.2731.53211.09850.99770.94760.67110.8617
DEPI 0.90820.92470.97691.08151.06241.0170.90041.05480.92140.9664
SGAI 0.98160.80560.75490.72930.70192.90330.41721.00791.46141.1687
LVGI 1.20530.84221.16141.02931.04880.91010.99190.84360.92811.0936
TATA -0.0023-0.1261-0.1074-0.0751-0.0465-0.0719-0.0683-0.0144-0.0377-0.056
M-score -1.85-3.27-1.81-2.94-2.00-3.26-2.39-2.97-3.02-2.22

Valero Energy Corp Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.67650.7460.92460.80731.10841.35941.20251.32091.61251.0941
GMI 0.73360.67860.57110.56830.62630.70770.88721.21021.2311.3763
AQI 1.00341.05380.96021.04381.22881.16331.1841.23021.05821.1405
SGI 0.94760.85710.78130.70510.67110.69350.70510.76090.86170.9943
DEPI 1.05481.03081.02140.97050.92140.91710.89290.92270.96640.9972
SGAI 1.00791.11791.35531.4781.46141.45821.38081.3051.16871.0477
LVGI 0.84360.86920.92060.8540.92810.91120.93891.02691.09361.1183
TATA -0.0144-0.0376-0.0451-0.0288-0.0377-0.03-0.0409-0.0461-0.056-0.068
M-score -2.97-3.14-3.23-3.30-3.02-2.71-2.79-2.48-2.22-2.51
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